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Lecture 20

ECON BC 2075y Lecture 20: Lecture 20 Notes

Course Code
ECON BC 2075y
Belinda Archibong

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Connecting Ideas: Efficiency, Justice and Equality
Gender Equality and State
Infant mortality in Finland, 1936-2010 per 1000/births has dropped significantly
Finnish babies sleep in cardboard boxes→ role of state promoting well-being
Putting a price tag on unpaid housework
Women getting paid for household duties and chores
Women bearing cost of unpaid private sphere labor
Should there be quota systems for women in politics a la India example?
Measuring Inequality: Gini Coefficient and Lorenz Curve
Lorenz curve
Straight diagonal line→ line of equality (45 degrees)
X axis→ cumulative share of ppl from lowest to highest income
Y axis → cumulative share of income earned
The Dalton Principle
If a transfer is made from a relatively poor to relatively rich individual,
inequality must increase
“Regressive” transfers (taking from poor and giving to the rich) must
worsen inequality
The Lorenz criterion
Known as criterion for inequality comparison
Given two distributions x and y, we say that x Lorenz-
a   a  : L ≥ L  a ,  >
for some p
X is unambiguously less unequal than y
Ex. x= (1,6,8) , y=(1,5,9)
Lorenz criterion generates a relation that is incomplete: when Lorenz
curves cross, the Lorenz criterion cannot decide between the two
But when it does hold, the ranking is considered unambiguous
Gini coefficient
Measure of income inequality that condenses the entire income
distribution for a country into a single number between 0 and 1: the higher
the number, the greater the scale of income inequality
Unequally distributed
Closer to the number one
One persona has all the income
Equally distributed
Closer to number zero
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